Biden imposes wave of sanctions on Russia for Ukraine ‘invasion’

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Joe Biden announced new sanctions on Russia as he accused Vladimir Putin of beginning an “invasion” of Ukraine, and warned that Washington was prepared to take further action if Moscow escalates its assault on Ukrainian territory.

Speaking from the White House on Tuesday, Biden announced measures targeting two of Russia’s largest financial institutions, VEB and Promsvyazbank, which support economic development and defence projects, as well as Russian elites and their family members.

Sanctions would also be aimed at Russia’s sovereign debt. “That means we’ve cut off Russia’s government from western financing,” Biden said. “It can no longer raise money from the west and cannot trade in its new debt on our markets or European markets either.”

The US president warned that Washington was prepared to go further if Russia continued its hostilities. In recognising the two breakaway provinces of Donetsk and Luhansk as independent, Biden said, Putin had “bizarrely asserted that these regions are no longer part of Ukraine and their sovereign territory”.

“To put it simply, Russia just announced that it is carving out a big chunk of Ukraine,” said Biden. “He is setting up a rationale to take more territory by force in my view . . . He’s setting up a rationale to go much further. This is the beginning of a Russian invasion of Ukraine.”

In a sign of the severity of the situation, Biden noted, ominously, that the Russian military was readying blood supplies for its troops. “You don’t need blood unless you plan on starting a war,” he said.

The US will redeploy some Europe-based troops and fighter jets to the Baltic states and Nato’s eastern flank, the Pentagon announced, emphasising the move would be for defensive purposes.

While Biden said he was taking measures to ensure the sanctions would not hit the US economy, he acknowledged that “defending freedom” would impose costs at home.

The US president’s remarks capped a frantic day of activity as Moscow pushed ahead with the groundwork for a Ukraine invasion while western governments countered with sanctions and appeals for diplomacy.

In a move that appeared to take the two countries closer to full-blown conflict, Putin endorsed the claims of Russian-backed separatists to the entire Donbas region of eastern Ukraine. Russia’s upper house of parliament unanimously approved a “peacekeeping” mission to the Donbas.

Hours earlier, Germany’s chancellor, Olaf Scholz, halted certification of Nord Stream 2, scuppering a pipeline project that would deliver Russian natural gas directly to Germany.

That, in turn, prompted a warning from Dmitry Medvedev, the former Russian president, that Europeans would bear the brunt of higher energy prices. “Welcome to the brave new world where Europeans are very soon going to pay €2,000 for 1,000 cubic metres of natural gas!” he tweeted.

The EU also announced a batch of sanctions targeting 351 members of the Russian parliament and 27 individuals and entities it said were responsible for undermining Ukraine’s sovereignty.

US officials said the sanctions Biden announced against VEB and Promsvyazbank would freeze their assets in the US, prohibit US individuals and businesses from doing any transactions with them, shut them out of the global financial system, and foreclose their access to the US dollar.

VEB was founded by Vladimir Lenin and formerly chaired by Putin when he served as prime minister from 2008 to 2012. It is essentially a special-purpose vehicle for the Kremlin to support priority projects regardless of their financial prospects. 

Though it styles itself after development institutions like the European Bank for Reconstruction and Development, it does not have a banking licence, central bank regulation or an independent board and cannot take deposits.

The bank was placed under US and EU sanctions in 2014 that limited its ability to repay $18bn in outstanding foreign debt.

Promsvyazbank, formerly a privately owned top-10 lender by assets, was nationalised in 2017 by the central bank, which then repurposed it as a special-purpose vehicle to finance defence contractors that were already under US sanctions.

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